Letter: MMC ruling on gas pipelines

Philip Rogerson
Friday 12 July 1996 23:02

Sir: You state ("Let the MMC settle the gas pipeline battle", 10July) that, "as far as the regulator is concerned the point about depreciation is non-negotiable: either TransCo accepts this downgrading of the amount of depreciation it is allowed to take out of charges or the whole thing goes to the MMC". TransCo's position on allowing full CCA depreciation is that determined by the MMC in 1993 and that applied by Ofgas in setting the TransCo formula which applies between 1994 and 1997. It appears that Ofgas is certain it can persuade the MMC that the MMC's decision in 1993 not to apply what it called an "arcane adjustment" to depreciation is wrong.

It appears also that "the regulator's view is that these [new efficiency targets] are perfectly reasonable and there's not a snowball in Hades' chance of the MMC being persuaded otherwise".

What is the point of the MMC if its decisions can be set aside or determined in advance so easily?

As to the need to see the Coopers & Lybrand and WS Atkins reports respectively on operating costs and capital expenditure, you paraphrase Ms Spottiswoode as saying, "Let's publish and be damned". We are delighted to read that she has made this positive decision in favour of transparency and, for our own part, eagerly await copies of the reports.


Deputy Chairman

British Gas

London WC2

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